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Company Reconstructions Fund Regulations 2020MEDIA ROOM
July 6, 2020
The ‘Companies Act (Company Reconstructions Fund) Regulations, 2020’ – Legal Notice 192 of 2020 – was recently introduced so as to create and control the administration of a fund referred to as the ‘Company Recovery Fund’. The latter is being introduced so as to aid and simplify company recovery procedures instituted as per article 329B of the Companies Act.
Payments from the abovementioned recovery fund shall be made to Special Controllers appointed in accordance with the aforementioned article. In addition, the recovery fund cannot have at its disposal an amount exceeding €500,000.
Unfortunately, due to the effect implied by the COVID-19 pandemic, article 329B of the Companies Act (dealing with the company recovery procedure used when a company is unable or is imminently expected to become unable to pay its debts) is or will be resorted to by many.
The Legal Notice highlights that the Official Receiver shall, without prejudice to any other right conferred upon him by any regulation including the Legal Notice in question:
- establish and maintain, in consultations with the Agency, arrangements for the making of payments to Special Controllers,
- certify claims for compensation by Special Controllers and,
- keep an updated list of all the persons admitted, as per law, to act as Special Controllers
Moreover, any person having the requisites needed to act as a Special Controller shall apply in the prescribed form or in any other form as accepted by the Official Receiver.
Furthermore, as per this Legal Notice, a person shall not be admitted to act as a Special Controller if:
- he is interdicted or incapacitated or is an undischarged bankrupt,
- he has been convicted of any of the crimes affecting public trust or of theft or of fraud or of knowingly receiving property obtained by theft or fraud,
- he is subject to a disqualification order under article 320 of the Companies Act,
- during the time he has been a director or a secretary of a company, he has breached the provisions of this Act for the third consecutive time in a period of 2 years (commencing upon the first breach),
- he has been convicted of any of the offences under the Prevention of Money Laundering Act and,
- he does not possess a minimum of 5 years proven experience in the administration of companies; or he does not possess a minimum of two 2 years proven experience in the administration of companies and a bachelor’s degree or equivalent from a recognised university.
The Legal Notice also establishes the remuneration and expenses amounts which are due to the Special Controller. These are recoverable from the recovery fund. Also, the Official Receiver has the power to increase the limitations included in the Legal Notice as per recommendation of the court.
The claim (including all necessary & requested documents) submitted by the Special Controller shall be made to the Official Receiver. The latter may also request other documents and information.
About the Author
This article has been authored by Bjorn Camilleri, CSB Group Legal Trainee. For any additional information or support required please contact us on [email protected].